Updated: Nov 1, 2021
With the festive season in full swing, offline retailers are pulling out all stops to lure shoppers. Attractive displays are an effective way to increase footfalls and to make products salient for shoppers. Both utilitarian (products bought for their inherent utility) and hedonic products (products bought for pleasure or indulgence) are promoted through window displays and in-store displays, which play a significant role in stimulating unplanned purchases and brand changes, maximising consumer spending.
However, to utilise each type of display most profitably, it is important for retailers to understand which display type is most effective for boosting sales of a specific kind of product. A study investigates this issue and tries to answer the question: Which products (utilitarian or hedonic) are more responsive to which types of in-store displays? It also examines which types of promotions are most congruent with which types of in-store displays.
The study found that shelf signages are the most effective displays for utilitarian products. like shampoo, detergent, cooking oil and wheat flour. Shelf signages highlight the stock-keeping unit (SKU) in its usual location, drawing customers’ attention towards the product. They allow customers to compare prices and analyse benefits, which is a common part of the purchase process for utilitarian products, more efficiently. Thus, the likelihood of sales of the highlighted SKUs increases.
Hedonic products like frozen snacks, flowers, clothes and toys, on the other hand, are served more effectively by end-of-aisle and island displays. End-of-aisle displays move the SKUs from their usual location to the end of the shelf. Island displays move the SKUs away from competing products to a separate location. By moving the SKUs to areas with more consumer traffic, both these display types encourage impulse buying.
The study also found a link between promotion types and types of displays (see Figure 1). According to the study, price or monetary promotions, i.e., direct discounts, rebates, cashbacks and coupons, improve the impact of shelf signages. This effect is noticed because, for habitually used utilitarian products, customers prefer direct, cost-based benefits. Price promotions can reinforce the choice triggered by the shelf signages. For example, a shelf-sign for a particular brand of biscuits showing 5% off on its larger pack might tempt a customer to buy the bigger pack instead of the smaller one.
Non-monetary promotions, i.e., gifts (premiums), sweepstakes, samples, buy one get one offers and contests, enhance the effectiveness of end-of-aisle and island displays. These promotions reinforce the hedonic effects of the highlighted products. They create a perception of greater enjoyment and/or a more interesting experience, which drives the purchase of hedonic products. For example, a free makeover combined with an island display can help boost sales of a premium cosmetics brand.
This study has relevant implications for retailers seeking to optimise their retail space utilisation and maximise their RoI on in-store marketing expenditure. They should use shelf signages (which are less expensive), combined with price promotions, for utilitarian products. For hedonic products, they should use more isolating (and therefore more expensive) in-store displays like end-of-aisle and island displays, combined with product promotions. Adopting this approach will help retailers improve overall store performance by optimising their in-store merchandising and sales.